Money-Laundering Issue Comes Out in the Wash

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State and federal regulators have called out Banamex USA over concerns about the Century City bank’s compliance with money-laundering laws.

In a lengthy consent order recently issued to the bank, the Federal Deposit Insurance Corp. and California Department of Financial Institutions directed Banamex to retain qualified management; strengthen its oversight of bank activities; and develop a program to ensure compliance with the Bank Secrecy Act, which requires financial institutions to assist the government in identifying and preventing money laundering.

The order does not specify what activities are at issue, but it says “the bank shall correct all violations of law and regulation” and ensure that employees are reporting suspicious transactions.

Paulo Carreno, the bank’s head of communications, said the primary purpose of the order was to ensure that Banamex maintains compliance with changes in the law. He said the bank has already undertaken a comprehensive review of its handling of money-laundering requirements.

“We are wholly committed to complying with everything” in the order, he said.

Banamex, a subsidiary of Citigroup, is the U.S. arm of Banco Nacional de Mexico. The bank caters largely to Mexican immigrants living in the United States, as well as companies doing business in both countries.

Coming Back

After a rough couple of weeks, Broadway Financial Corp. has started to turn things around. And investors are taking notice.

The holding company for L.A.’s Broadway Federal Bank reported second quarter earnings of $1.4 million, its first profitable quarter in more than a year. The company, which was facing a possible delisting from Nasdaq for not filing its quarterly report on time, said it is back in compliance with the stock exchange’s requirements.

The revelations helped Broadway’s stock surge more than 63 percent, making it the top gainer of the week on the LABJ Stock Index. (See page 26.) Shares closed Oct. 3 at $1.68.

The news follows a series of setbacks for Broadway. It recently announced that it would restate earnings for last year and the first quarter of this year after learning of errors made in determining loss provisions on certain impaired loans. The restatements caused the delay in reporting second quarter earnings and led to a sharp drop in the company’s stock.

Memorandum Lifted

Wilshire Bancorp Inc., meanwhile, has unburdened itself of regulatory scrutiny.

The Koreatown parent of Wilshire State Bank said last week that the Federal Reserve Bank of San Francisco has terminated a previously issued memorandum of understanding with the company.

“We are pleased that the FRB has recognized the improvement in our overall condition and determined that the MOU is no longer warranted,” Wilshire Chief Executive Jae Whan Yoo said in a statement. “With the termination of this MOU, we will now have the flexibility to consider additional opportunities for the utilization of our excess capital.”

The institution was hit with the informal enforcement action last year after it suffered heavy loan losses and admitted to weaknesses in its underwriting procedures.

Since then, the bank has taken a number of steps to improve its condition, including exiting the Troubled Asset Relief Program and resolving a memorandum of understanding with the FDIC and state regulators.

Taking Texas

L.A.’s private-equity firms are keeping busy – and they seem to have a keen interest in Texas.

Several prominent local firms, including Gores Group LLC and Oaktree Capital Group LLC, have announced acquisitions recently involving companies from the Lone Star State.

Gores, headquartered in Westwood, bought Astadia Inc., a cloud computing company in Dallas. Terms were not disclosed.

Downtown L.A.’s Oaktree teamed with Houston real estate firm Hines to acquire a portfolio of Las Vegas office buildings for an undisclosed sum.

Additionally, Marlin Equity Partners in Hermosa Beach has purchased Absolute ATM Services Inc., a Houston company.

C-Suite News

The board of Broadway Financial Corp. has elected Virgil Roberts chairman of the holding company and bank subsidiary. Former Chairman Paul Hudson will remain on the board and assume the responsibilities of legal counsel. … BNY Mellon Wealth Management, a subsidiary of Bank of New York Mellon Corp., has announced that Tiffany Barbara and Bob Bernstein have joined the Century City office as senior portfolio managers. Grace Russak also joined the office as senior director for business development. … Denise Yi has joined Citi Private Bank’s North America Asian clients group as a vice president in its Beverly Hills office. … Shane Passarelli has joined Capital One Bank as senior vice president of commercial and specialty finance in Los Angeles.

Staff reporter Richard Clough can be reached at [email protected] or (323) 549-5225, ext. 251.

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